In my work as a financial advisor, I've worked with hundreds of retirees, and there are three

common mistakes I see over and over and over again. So in today's video, I'm going to share

with you what those three mistakes are, quantify for you, how much this might be costing you,

and then show you better ways to approach this so that you can make the most of your retirement

years. So if you're nearing or in your retirement years already, avoiding these mistakes can help to save you money, stress, and even a tremendous amount of regret.

So let's jump right in. The first mistake I see people make is ignoring the impact of taxes in their retirement years.

So many people assume that they retire, their income goes down, what they need to live on goes down, so taxes just magically go down with it. Now, the problem is, for the first few years of retirement, this belief is confirmed. They do drop into a lower tax bracket, but let me actually show you what that looks like, because if all you're focused on is the first two years and what things look like there, you might be neglecting a potential tax bomb that's waiting for you if you don't take the correct steps today.

So let's take a look at Lori real quick.

Lori is 61 years old today.

Lori is a sample client to illustrate this purpose.

She has about a million dollars in her portfolio and she's looking to retire in a few years.

If we jump right to her tax strategy here, I want to start by understanding what is Lori expected to pay in taxes if there's no tax strategy that's executed upon. What it's going to show you is a common trap that people fall into when they retire. So if I go right to this page here, Lori's tax strategies and take a look at the details of what's the expected amount that she's going to pay in taxes, I can see her total taxable income today. So her taxable income today is her actual gross income minus any deductions that she has. Then what we can see is what's the total federal tax liability that she's expected to have each year. So in her working gears, you can see that that's the number right here, about $25,000 or so of federal tax is paid, and then that number drops next to nothing. Why is that? Well, it's because she has a good amount in her brokerage account. She's living on Social Security on top of that. So when she retires, there's not a lot of tax liability that she has. So this lures people into thinking that, wow, I'm retired. I don't have to worry about taxes as much. and then what happens is this. There's a few years of very low and even nothing in taxes, and then what happens

is that number jumps up, and it starts to creep back up a little bit and then required

minimum distribution start. You can see that her federal tax liability jumps right back to

where it was in our working years and even starts to

grow beyond that. So what can you do here? Well, number one, the first thing that you can do is

recognize that your tax bill and retirement is not guaranteed to be lower than your tax bill

in your working years. There's a lot of potential tax traps. Now, part of this is some normal and

basic things, things like your federal income tax liability, your state income tax liability, but then there's other components that aren't so basic or aren't so expected. Things like taxes on social security based upon your provisional income. Things like Irma surcharges or Medicare taxes that you'll pay if you're not careful about how much income you're realizing year after year. So let's go right back to Lori's plan and see what could she do. It's a relatively simple thing that she could do to dramatically reduce the amount of taxes she needs to pay in retirement. So if we go back here, what I want to see is how much is she expected to pay in federal taxes? If she doesn't do anything, this is just a reflection of what we just looked at. She's paying about 25,000 or so in taxes today. She retires and she's in a zero percent tax bracket that feels really good, but before too long, required distributions kick back in and she's right back where she started, and that number even begins growing again. So what can she do? Well, what she can do is take advantage of these years right here. Take advantage of lower income years to say, how can we start to shift some of the money that's in pre-tax accounts and shift that via Roth conversions into Roth accounts?

So, for example, if all I did was says, what if every year that Lori was underneath the 12% marginal tax bracket?

What if she converted just enough from her IRA into

her Roth IRA to pay taxes at a 12% rate on the top marginal dollar? Well, if she did that,

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